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Sunday Outlook

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Weekend Developments

·         Greece’s government reaffirmed its election pledge to end austerity, even as it seeks an agreement with its creditors who are demanding spending cuts to release financing and avoid a default.

·         Greece seeks an agreement by Friday to provide the funds it needs to meet its obligations. At stake is a 240-billion euro ($275 billion) aid package.

·         Sources with knowledge of the situation report that Greece will be unable to make its June 5 debt payment to the International Monetary Fund without the aid package.

·         Look for the above to influence the currency markets over the coming week, creating uncertainty.

·         The dollar bounced off chart support on Thursday, but then sold off late Friday to settle essentially right at that support with a bearish bias that would support the broader commodity sector.

·         Much of the Midwest is expected to dry out in the week ahead, allowing fieldwork to resume.

·         Showers spread across the Midwest next weekend, but southern areas may remain dry.

·         Cold air is expected to bring patchy frost to the far northern Midwest early this week, although the models are not as cold as they were on Friday, keeping lows in the low 30s.

·         The Southern Plains are expected to remain in a wet pattern into June, creating concerns for winter wheat that has already endured heavy rains.

·         Look for wheat to show leadership this week, with a bias toward resumed short-covering to lift corn and wheat prices higher near-term due to the sheer size of speculative short positions held in these market.

·         Traders will look at rallies as selling opportunities in soybeans after seeing USDA print a 500 million-bushel ending stocks estimate for the next marketing year Tuesday. Soybean & soymeal charts are bearish.

Commodity Weather Group Weekend Summary

In the Midwest/Delta, weekend rains gradually increased across the west/south, favoring central/southeast SD, central/far southwest MN, southwest IA, KS, western MO, western KY, western TN, and far northern MS. The heaviest totals were in parts of KS/northwest MO and near the KY/TN border.

The showers head north/east into tomorrow but mainly favor the far northwest Midwest/Delta. Showers return to the far southwest Midwest/Delta at mid-week, but the rest of the Midwest is dry for much of next week to aid seeding progress. Showers expand next weekend in the belt but may still miss parts of the southern Midwest, with the best opportunity for more widespread coverage late next week. This should limit concerns, with the late-month rains aiding Midwest growth.

Cold air will bring patchy frost to the far northern Midwest early this week. While there is still a chance for some freeze damage to emergent corn in mainly ND on Tuesday morning, many models now keep lows in the low 30s and above damage levels. The Delta (particularly AR) will remain more prone to interruptions to fieldwork and some wetness concerns but will also see breaks between the shower events to allow some seeding.

In the Plains, weekend showers scattered throughout but were heaviest in central/western SD, the NE Panhandle, south-central/eastern KS, northern/eastern OK, central/northeast parts of the TX Panhandle, and central TX. The wettest weather is likely late this week and this weekend in the S. Plains, causing more quality/flooding concerns for already saturated sections of TX/OK. However, an active storm track continues into June as well.

Spring wheat areas will dry out, with some early stress still possible in the Canadian Prairies by month’s end.

Limited Rains in China Benefit Maturing Wheat and Corn/Soy Planting Pace. Rains cross Northeast China early this week. A dry pattern follows for at least a week, aiding corn/soy seeding. Wheat has sufficient moisture for late filling, and quality will be enhanced.

Showers Favor C. & E. Europe Next 10 Days; E. Ukraine/S. Russia Mainly Dry , But Heat Limited. Models are not as hot for Ukraine/S. Russia in the next 10 days, despite a lack of rain. This slows moisture declines and minimizes wheat stress. Corn planting progresses well in western Europe, with limited rains.

 

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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